Dubai firms' maxim: Diversify

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Dubai firms maxim: Diversify

Dubai - Some of Dubai's long-standing businesses are beating global recessionary trends by diversifying their revenue streams - geographically, sector-wise and product-wise

by

Sandhya D'Mello

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Published: Fri 23 Dec 2016, 7:00 PM

Last updated: Sat 24 Dec 2016, 9:33 PM

'Don't put all your eggs in one basket' is something that any financial investor worth his salt will tell a person looking to put their money to use. That thumb-rule is true for corporates too, and the current business environment makes it more relevant now than it has ever been in the past.
In this era of hyper-localisation and ultra-globalisation, some of Dubai's long-standing businesses are beating global recessionary trends by diversifying their revenue streams - geographically, sector-wise and product-wise.
Khaleej Times spoke to a handful of corporates and delved into why diversification is inevitable.
Aster, Danube, Eurostar, Tawseel. to name few, chalked out smart strategies not to remain in green but to aspire for solid growth in the face of sluggish regional business environment. Alisha Moopen, executive director and chief executive officer, Aster DM healthcare, GCC, said: "The world is changing at such a rapid pace and it's an absolute necessity for today's companies and corporates to consider diversification with smart growth strategies to ensure that they have a sustainable advantage and to ensure that they don't run the risk of being redundant."

Eurostar Group, for instance, began operations in the UAE as a digital satellite provider in 1994. It has since diversified its business with interests in consumer electronics, FMCG and real estate. The group has also spread itself geographically, with operations spanning many countries in the Middle East and Africa.

"Our business model has always been built on diversification and this is what has been the key to our success over the years. The group's overall performance in 2016 has seen some upward spikes as we are a multi-faceted company in over 10 different business verticals and markets. This distribution has helped our company's sustainable performance," says Raju Jethwani, chairman of Eurostar Group.
Similar sentiment is voiced by Danube - which is making foray in to Africa - was established in the year 1993 and was founded under
 Rizwan Sajan, founder and chairman of the group. Starting off as a small trading firm, the company is expanding its foothold in the region, and has established itself as top building materials company along with other branches under its vast umbrella. Danube Group's operations are dominated by two main segments- Building Materials FZCO and Danube Home (Home Interior/ Décor Solutions).

The firm maintains it has always looked at identifying areas of opportunities whether vertically within the business or unrelated but beneficial for the company. In 2016, the group identified untapped markets to optimise its operations.
"At present, the African continent does pose as a good market for sanitary products where they have a latent demand for quality products due to the lack of availability locally. Therefore, we ventured deeper into the African market and are looking to expand there in a big way. We continue to. identify potential trade partners as well," says Anis Sajan, managing director of Danube Group.
"It is very important for businesses to diversify to unlock new revenue streams and maintain the bottom line. Both related and unrelated diversification are required to increase the revenue generation and maintain resilience. One such example is Danube Properties, where we have been able to provide premium quality at affordable pricing by leveraging our business of building material."
Tawseel Distribution and Logistics, or Tawseel, is a wholly owned subsidiary of Dubai Media Incorporated (DMI) having business interests in distribution and logistics, commercial printing, radio broadcasting, TV broadcasting and publishing.
The company has set up an academic books division to source and supply books to schools and universities in UAE and Oman. The logistics aspects of its new business is supported by its existing infrastructure, which has ample spare capacity due to declining revenue streams of their core business.

Nobel Polath, chief commercial officer, Tawseel Distribution and Logistics, said: "Exploring new revenue streams is the only way to stay afloat in the year ahead. For many companies, the current fiscal gap between revenue and fixed costs is huge and gap is going to widen in 2017. The recipe for success therefore lies in the implementation process of how a company can optimise its resources, especially fixed assets to generate other revenue streams. The next move in 2017 will be in the direction of e-commerce, particularly in the logistics side of it. If we don't do it, we would be forced to drastic cost cutting measures. But I am confident Tawseel will weather the challenges as we have a strong diversification plan in place."
- sandhya@khaleejtimes.com


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